Driving Forces

March 4, 2014

Founded as a “cook your own steak” restaurant in an abandoned gas station in 1974, Quaker Steak & Lube has evolved into one of the nation’s most up-and-coming casual-dining chains, renowned for its award-winning chicken wings and flavorful — make that hot — sauces. But as much as the food offerings have changed at “The Lube,” the brand remains true to its gas station and vintage car-loving roots.

The founders, George “Jig” Warren and Gary “Mo” Meszaros, conceived of the concept as more than a restaurant, but also as a way to preserve the culture of old gas stations and high-powered muscle cars, vintage autos and antique motorcycles. Today, the company still rescues classic cars, hanging them from the walls and ceilings in each restaurant, where they share space with gas-station memorabilia. The decor, along with high-octane events, help the concept stand out in a crowded field. (As to how it got its name, Quaker Steak was founded in Sharon, Pa., not far from Oil City, home of Quaker State Oil.)

Quaker Steak is owned by some 44 shareholders who bought into a private offering in 2004, which is when it started franchising and its growth began in earnest. Now with 63 restaurants in 19 states and Ontario, Canada, the chain is headquartered in San Francisco and poised for even greater growth under evolving leadership.

In January, CEO John Longstreet stepped down after nearly four years at the helm. Quaker Steak CFO Frederick Dreibholz is serving as interim chief executive, while the search for a new CEO is undertaken.

Upon John Longstreet’s departure, the company was looking for an interim replacement while they complete a nationwide search for the permanent CEO. As I was the sitting CFO and had intimate knowledge of the brand and our associates, it made sense for the company to appoint me during this transitional period.

Tell us a little about Quaker Steak & Lube.

Quaker Steak & Lube is an iconic brand that has experienced significant growth in the past, and is poised to continue growing in the future. Our brand is well-received by our customers as is seen by our near industry leading average unit volumes. I look forward to continuing to move the brand forward and working with the great team assembled here.

Will you change anything significant during your term or continue the current direction?

As the interim CEO, I’ve been tasked to maintain the positive impetus we have gained over the past several years. In the restaurant industry, there are always small changes that are required to continue to retain your existing customers and attract new customers. As a result, I will focus on continuing to push the brand forward without making significant changes.

Tell us about the restaurant design.

We focus on authentic motorsports-themed decor. It is virtually all authentic cars and motorcycles — hanging from the ceiling, displayed on the walls and furnishing. There are automotive parts, oil cans, gas cans, license plates and more. Each restaurant has a unique decor package, and each has four different spaces. The Handlebar area features motorcycles. The Vet VROOM area is dedicated to Corvettes dating from 1962 to the late 1970s. Thunder Alley is the NASCAR area. Fourth is an outdoor seating area with a bar called the Brickyard Patio.

As to the exterior, our buildings look like gas stations and use colorful LED lighting. The LEDs not only save energy, but also help attract people. When you drive by one of our restaurants at night, you want to stop and see what is going on.

Who is the typical Quaker Steak & Lube customer?

We veered away from conventional marketing theory, which recommends carving out a niche. George and Gary always wanted to be all things to all people, and, by and large, they have succeeded. We attract a broad middle-class group of customers. The heaviest users range from 25 to 55, and 53% of our customers are female. Everyone asks: How can more than half of the customers in a motor-themed restaurant be women? There are a couple of reasons, including that we appeal to families. We have lots of games and lots of things for kids to do. We also work hard to make the bar female friendly.

At lunch, you will find tables of blue-collar workers, as well as doctors, lawyers and groups of elderly ladies.

What is the average footprint and site selection criteria?

Our site selection criteria include 60 different points, with the most important being a dense residential population. About 47% of our guests have children, so we’re skewed toward families with average household incomes between $35,000 and $100,000. To achieve our average unit volume, we also need nearby office, retail or industrial for a large daytime population for our lunch business. We like highway visibility, too.

Our average footprint is 7,700 sq. ft., which requires a two-acre lot, but we have two other prototypes for 6,250 sq. ft. and 5,250 sq. ft. Overall, our restaurants range from 4,500 sq. ft. to 12,000 sq. ft.

What differentiates Quaker State from the competition?

We commissioned a survey of 2,500 customers in which we asked them if they weren’t going to Quaker Steak, where would they go. Customers identified our competition as Chile’s, TGIF, Buffalo Wild Wings, Applebee’s and Red Robin. We differentiate Quaker Steak from these restaurants with our unusual motor theme, authentic decor, casual appeal, energetic music and entertainment themes. We have car cruise-ins on Sundays, all-you-can-eat wings on Tuesdays, biker night on Wednesdays.

What are your plans for expansion?

Most of our growth will come from franchising. We estimate that 70% to 80% of our future growth will be franchised restaurants. (The company plans to open 12 or more locations in 2014.)

On the company-owned side, we will expand in our heritage markets: Pennsylvania, Ohio and West Virginia. For franchisees, we will go where they want — as long as we can get product to their restaurants cost-effectively. We’re as far west as Denver now. Our northern-most restaurant is in Fargo. We’re as far south as Houston. In the Southeast, we’re in Clearwater, Florida. In the East, we’re in upstate New York and New Jersey.

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